nanowrimo_lj | characters: do they have free will or do you rule with an iron fist?

I had a heated discussion with my sister last night about characters and their actions. While writing, I simply thought aloud, "Don't you hate it when a character does something you didn't mean for them to do?" My sister looks at me like I'm crazy and says, "What do you mean? YOU control the characters." We then went on into a great big discussion, her saying the writer has complete control and I saying that the characters do what they feel, veering from the plans and plots we have for them.

What do you think? How do your characters behave? Do you have complete control over them?